More Americans Than Forecast Filed Weekly Jobless Claims

Job seekers wait in line to enter the Dr. King career fair in Brooklyn, New York. Photographer: Michael Nagle/Bloomberg

April 19 (Bloomberg) -- More Americans than forecast filed
claims for jobless benefits and sales of previously owned homes
unexpectedly dropped, indicating the almost three-year-old
economic expansion may be moderating.

Jobless claims fell by 2,000 to 386,000 in the week ended
April 14 from a revised 388,000 the prior period, Labor
Department figures showed today in Washington. The median
forecast of 47 economists surveyed by Bloomberg News called for
a drop to 370,000. Purchases of homes fell 2.6 percent to a 4.48
million annual rate in March, the National Association of
Realtors reported in Washington.

Stocks declined as the claims data bolstered Federal
Reserve concerns that growth may not be fast enough to sustain
improvements in the job market that have helped push
unemployment to a three-year low. Other reports today showed
that an index of leading indicators rose for a sixth month and
consumer confidence improved, while manufacturing in the
Philadelphia area grew at a slower pace.

“The economy has slowed a notch,” said Ryan Sweet, a
senior economist at Moody’s Analytics Inc. in West Chester,
Pennsylvania, who is the most accurate forecaster of existing-home sales for the two years through February, according to data
compiled by Bloomberg. “We’re just not going to be able to
duplicate the growth we saw in the first quarter.”

The Standard & Poor’s 500 Index fell 0.6 percent to
1,376.92 at the 4 p.m. close of trading in New York as the data
overshadowed better-than-forecast earnings at Bank of America
Corp. and Morgan Stanley. The yield on the 10-year Treasury note
was little changed at 1.97 percent.

Germany, Japan

Other reports today offered signs of strength for the
global economy.

Germany’s economy, Europe’s largest, will expand 0.9
percent this year, up from a prior estimate of 0.8 percent, four
leading economic institutes, including Munich-based Ifo, said
today in their twice-yearly economic outlook for Chancellor
Angela Merkel’s government. The economy will grow 2 percent in
2013, they said.

Japan reported the fastest export growth in a year and a
smaller-than-expected trade deficit, aiding prospects of a
sustained recovery for the world’s No. 3 economy.

In the U.S., estimates for jobless claims in the Bloomberg
survey ranged from 350,000 to 390,000. The Labor Department
revised the previous week’s figure up from 380,000. After being
revised to 370,000 from an initial estimate of 360,000, the week
before that was revised back to 362,000, today’s data showed.

Revising Figures

States are revising the figures more than usual and as of
now there is no explanation for the changes, a Labor Department
spokesman said. The repeated revisions may make it more
difficult to determine the trend in claims.

Companies trimming their workforce include Cracker Barrel
Old Country Store Inc., which runs country store-themed
restaurants. The company said on April 17 that it has cut 20
positions to reduce costs, and severance and other charges may
decrease third-quarter earnings by 5 cents a share.

Employers added 120,000 jobs in March, half as many as in
February and the fewest in five months, according to payrolls
figures released on April 6. The jobless rate fell to 8.2
percent from 8.3 percent the prior month as people left the
workforce. Still, the economy has added 635,000 jobs since
December.

“Recent labor market data provide an example of the uneven
pattern of economic activity,” Federal Reserve Bank of
Cleveland President Sandra Pianalto said in an April 16 speech
in Lexington, Kentucky. “Monthly ups and downs like these make
it hard to confirm the underlying pace of job creation.”

Soft Spot

Residential real estate remains the economy’s soft spot,
challenged by stricter lending standards, lower home values and
the threat of more foreclosures.

Sales of existing single-family homes decreased 2.5 percent
to an annual rate of 3.97 million in March. Purchases of
multifamily properties, including condominiums and townhouses,
fell to a 510,000 pace from 530,000.

Existing-home sales, tabulated when a contract closes,
climbed to 4.26 million last year, from 4.19 million in 2010.
Demand peaked at 7.1 million in 2005 during the housing boom. In
2008, sales totaled 4.1 million, the least since 1995.

There were some bright spots in the report. The median
price of a previously owned home rose 2.5 percent to $163,800
from $160,600 in March 2011.

Borrowing Costs

Cheaper financing is doing its part to sustain home sales.
The average rate on a 30-year fixed mortgage fell to 3.88
percent last week, close to the record-low of 3.87 percent
reached in February, according to Freddie Mac data.

To help hold down borrowing costs like mortgage rates, Fed
policy makers last month said they will continue to swap $400
billion in short-term securities with long-term debt to lengthen
the average maturity of the central bank’s holdings, a move
dubbed Operation Twist. The program is scheduled to come to a
close by the end of June. Policy makers next meet on April 24-25.

Separately, the New York-based Conference Board said its
gauge of the outlook for the next three to six months climbed
0.3 percent after a 0.7 percent gain in February that was the
biggest in 11 months. The median forecast of economists surveyed
by Bloomberg News called for a rise of 0.2 percent in March.

Manufacturing in Philadelphia

The Federal Reserve Bank of Philadelphia’s general economic
index decreased to 8.5, the lowest level since January, from
12.5 in March. Economists forecast the gauge would dip to 12,
according to the median estimate in a Bloomberg survey. Readings
greater than zero signal expansion in the area covering eastern
Pennsylvania, southern New Jersey and Delaware.

Another regional report this week showed that manufacturing
in the New York area expanded in April at the slowest pace in
five months.

“If the regional manufacturing economies are slowing, it
signals the national manufacturing economy is slowing as well,”
said Neil Dutta, an economist at Bank of America in New York.

Slower economies in Europe and China may restrain exports
and limit bookings to American factories, which have been the
mainstay of the expansion. At the same time, a pickup in motor
vehicle sales in the first quarter remains a source of strength.

Consumer confidence is holding up, another report today
showed. The Bloomberg Consumer Comfort Index was minus 31.4 in
the period ended April 15, compared with minus 32.8 over the
previous seven days. The reading equaled that from two weeks
earlier as the best since March 2008.

More Optimism

Gains in confidence raise the odds that consumer spending
will continue to grow and benefit companies like Bed, Bath &
Beyond Inc. and Toyota Corp. At the same time, five million more
Americans are unemployed now than when the recession began in
December 2007, showing why cheerier outlooks will be difficult
to sustain.

Men, college graduates, homeowners and households earning
more than $50,000 a year were among the groups for which
confidence climbed last week to the highest level in four years.
For those making from $50,000 to $74,999, the index jumped to
the highest level since January 2008.

There was also a political element as sentiment for
registered Democrats rose last week to the best level since
August 2007, and that for independents climbed to the highest
since December 2007. The index for Republicans last week was 38
points lower than its average dating back to 1990.

Retail Sales

Retail sales rose more than forecast in March as Americans
snapped up everything from cars and furniture to clothes and
electronics. The 0.8 percent gain was almost three times as
large as projected by the median forecast of economists surveyed
by Bloomberg and followed a 1 percent advance in February,
Commerce Department figures showed this week.

Toyota this month raised its forecast for 2012 industrywide
U.S. sales of cars and light trucks, citing rising sentiment.

“We’re starting to see improvement in consumer confidence
and, combined with rising fuel prices and aging vehicles, the
market is starting to move,” Bob Carter, Toyota’s group vice
president for U.S. sales, told reporters on April 5 at the New
York auto show. “It’s happening quicker than anyone thought.”